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in your pocket

Here's what Budget 2023 means for your payslip if you're earning €40,000

You’ll be paying less tax because of changes to the PAYE cut-off, tax credits, and the USC.

BUDGET 2023 IS out now, and with it, a range of changes to taxes charged on income.

Minister for Finance Paschal Donohoe announced an increase in tax credits, a higher threshold for the PAYE’s upper tax band, and minor adjustments to PRSI and USC.

The measures will affect people differently depending on their income. You can find out what exactly they mean for you with The Journal’s Budget Calculator.

For a person earning an annual income of €40,000, here’s a breakdown of how your tax will change.

We’ve already explained what it means for someone on €30,000 and we’ll be bringing you examples of what it means for people earning €60,000 and €100,000 too, as well as our full Budget coverage on Government spending, social welfare, and other changes.


The main change to PAYE in this year’s Budget is that the entry point for the higher tax band rate has been increased by €3,200, meaning a smaller proportion of income will be subject to the higher tax rate.

Additionally, personal tax credits and employee tax credits are increasing by €75 each, bringing both to €1,775. 

For a single person earning €40,000, that means income tax will decrease from €5,240 to €4,450.

That means savings on PAYE for a single person earning €40,000 will amount to €790.


Changes to PRSI in Budget 2023 will not affect this income level. PRSI for a single person earning €40,000 will remain at €1,600, giving €0 in savings here.


Some minor adjustments are being made to the USC to account for the rise in the minimum wage.

The ceiling of the second USC rate band is increasing from €21,295 to €22,920.

That means USC tax on an income of €40,000 would be charged as follows:

  • 0.5% on the first €12,012 = €60
  • 2% on the amount between €12,012 and €22,920 = €218
  • 4.5% on the remainder up to €40,000 = €769

It gives a total annual USC payment of €1,047, a saving of around €40 compared to 2022.


Across the three taxes, the changes in this year’s Budget will bring a reduction of €830 for a single person.

For a married person, your savings will depend on whether you and your partner file your taxes together or separately and whether your household has one or two incomes.

Use The Journal’s Budget Calculator to find out what exactly the changes mean for you.

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